The world of the NED has been moving at a pace, the traditional
view of a NED; ex-top executive, one or two board positions after
retiring and aged in 'his' 60s, is still with us, but there is a
marked trend towards, younger professionals, who are making a
deliberate choice to abandon corporate life and pursue an NED
portfolio and who have reached senior executive positions
relatively early in their careers and want a change of
lifestyle.
This trend has been articulated in the recently published IDDAS
NEDs Perspective Report, which is the third in the IDDAS Board
Dynamics series. These Reports provide a unique insight into
the Board world, with the previous two Reports giving the
Chairman's Perspective and a Females FTSE 100 Perspective on
Boards.
This powerful triangulation of Reports provides a real sense of
how the Board works and what it is like to be on a Board; 'hearing'
directly from NEDs, Chairman and FTSE 100 female Directors the
reality of the Boardroom. The most recent NED Perspective
Report has given a number of insights and views, for example.
- The majority of NEDs are reluctant to have compulsory quotas
introduced to increase the numbers of women on boards, but
recognise the need for change
- A third think the level of remuneration for NEDs is too low
given the increased workload and greater risk to corporate
reputations now involved with the role. However, most
acknowledged they were well rewarded and that too much focus on
financial reward could compromise independence
- NEDs see challenge in the boardroom as vital to their position,
however they agree this should come with an equal measure of
support - a balance they sometimes find difficult
- The lifestyle and practical changes between executive and NED
roles are vast. As well as stepping back and accepting less
control, NEDs commented on the lack of administrative support they
were used to in their corporate careers
- NEDs have mixed views on whether those from outside the
corporate world such as media, HR or academics should be considered
for NED roles
- Many said that the board should not be a team, rather that they
should learn to understand each other and work effectively, which
should be done outside the boardroom
The full report consists of a wonderful array of quotes directly
from the NEDs and we hear the 'real voices' of their motivation,
frustration and excitement. In particular, I was stuck by the
sense of the 'Board' not being viewed as a team, but as a
collection of individuals who meet in a common space, the inference
being that being a 'Team' takes away objectivity and is too cosy.
This provided a fascinating insight which got me thinking of
how we define this Boardroom space. How can we start to
provide the 'Board' with the sense of their own worth as a 'Team',
based on the definition of a high performing team, as needing, a
common vision, values and strategy; constructive, creative,
challenge and debate, which surely is a prime function and
description of an effective Board?
Potentially, this misunderstanding of what a team is, could well
be at the core of how we develop effective challenge and
behavioural frameworks for the 'Board Team' to become most
effectively. We may need to re-calibrate this space in a
different way from traditional 'team working' and be more cognisant
of the different perspectives that the constituent cohorts bring to
the Board. Certainly the NEDs are coming to this 'team space' with
a clear and increasingly demanding 'governance' perspective and a
keen eye on their duties and responsibilities as a NED, which are
increasingly in the spotlight.
The Executive Team, additionally brings a set of perspectives
and energies which are closely linked to their central individual
values and 'status', to which any 'threat' is likely to elicit a
strong reaction. One of the key developments emerging from
neuroscience research is the impact that threats and anxiety can
have on our power for rational deliberation and perspective.
As the brain is threatened it becomes overwhelmed and reverts to a
short term protective mode, with a shortening of horizons and acute
awareness of the immediate, at the expense of the longer term.
The Chairman's role is to 'orchestrate' this space and develop a
coherent and robust atmosphere of Trust, Challenge, Vision and
Coherence, which is quite a balancing act. There are
many artful Chairman who able to 'pull' this off, but one of the
aspects of our Chairman's Research was how little Development and
Support Chairman had received to achieve this level, most having
got there through a process of previous experience, trial and
error.
Some of the aspects of this balancing act have been identified
by the Financial Reporting Council (FRC) in their 'Guidance on
Board Effectiveness', which identifies the need for appropriate
decision making frameworks and the creation of an atmosphere of
effective challenge towards strategy and the risk model of the
organisation. The refining of this 'Board Team' space is
overdue, the challenge is for Boards to more clearly understand
their own interpersonal dynamics and create an open and recognised
decision making framework which stands the test of tough
times. The FRC guidance describes the dangers of 'group
think', and a casual and untested decision making process which can
be overrun by events.
Additionally, the IDDAS Chairman's Report and the FTSE 100
Female Directors Report, along with other reports in this area have
identified the 'female' approach to challenge and decision making,
which is less directly confrontational, more systematic and less
ego driven, as a positive influence on Board performance.
It is likely, that as we drive toward the achievement of the
Lord Davies Report targets of 25% females on FSTE 100 Boards by
2015, there will be an updraft of females onto Public quoted Boards
and also onto the organisation's Executive Committee, which the
Davies Report rightly identifies as the feedstock for Board
Directors of the future.
So, it is my hope, that as Boards review their performance and
fitness for purpose for the future that we will see both the desire
for; and increased capability, to deliver an open and interactive
'Team Space' environment which leads progressively to enhanced
Board Effectiveness.
IDDAS
IDDAS
is a leading boardroom consultancy firm, specialising in
individual director and boardroom effectiveness. Its work
covers board assessment, experience-based coaching and mentoring,
leadership facilitation and development, individual assessment and
corporate governance services. IDDAS also assists directors
and senior executives with their business and personal career
transitions.
IDDAS services are designed for chairs, CEOs, main board
directors, subsidiary/divisional and functional leaders of FTSE,
international and private companies, financial institutions,
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partners in professional services firms.
The IDDAS offering covers:
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